If you’re a private landlord in the UK, you may have heard that Section 21 of the Housing Act 1988 could soon be abolished.
If you’re not sure what that means or how it might affect you, don’t worry – we’re here to explain.
What is Section 21?
Section 21 of the Housing Act 1988 allows private landlords to evict their assured short-hold tenants without having to establish fault on the part of the tenant. It’s sometimes referred to as the ‘no-fault’ ground for eviction. Under this law, landlords can reclaim their property with two months’ notice without claiming fault on the part of the tenant, and can currently be served once a tenancy’s fixed term has ended, or if a tenancy has no set end date.
What are the Proposed Changes?
The UK government has proposed to abolish section 21 evictions and introduce a simpler, more secure tenancy structure. A tenancy will only end if the tenant ends it or if the landlord has a valid ground for possession. The grounds for possession will be reformed to ensure landlords have effective means to gain possession of their properties when necessary.
The abolition of Section 21 would be just one of several changes to the private rental sector.
What are the Implications for Landlords?
With such significant potential legislative changes, landlords – and prospective landlords – might be left worrying about their properties, the potential damage difficult tenants could cause, and the effect it may have on their finances.
The end of ASTs
The abolition of Section 21 would put an end to so-called “no-fault evictions”, and instead transition all tenancies to periodic, as part of the ongoing project to create longer tenancies. Thus, all Assured and Assured Shorthold Tenancies will convert to periodic tenancies, which means that there will be no set end date on a tenancy.
The tenant will be able to give two months’ notice at any time to leave the property, while landlords must provide a valid reason to ask their tenants to leave.
Also, landlords will only be able to use the existing Section 8 framework for eviction. However, the government proposes widening the scope of mandatory grounds of possession to include repeated serious arrears, landlord selling property or moving in close family member, and criminal behaviour or serious antisocial behaviour.
Difficulty Selling Your House
In some instances, landlords will not be able to evict a tenant within the first six months of the contract start date, such as when they wish to move into the property or sell it.
Evictions over Rent Arrears
Currently, if a tenant falls behind on rent, landlords can evict them but only after two full months of arrears have passed and a Section 8 notice is issued. This process can take a while, as the landlord may need to apply for a possession order through the court. Meanwhile, the tenant isn’t paying rent, which can be tough on landlords financially. Thus, to avoid this, many landlords currently use Section 21 instead, which allows them to evict a tenant immediately with a two-month notice period. This process is usually faster and doesn’t require a court hearing.
If Section 21 is removed, landlords may have a harder time evicting non-paying tenants unless the court process is improved.
Landlord Organisations’ Concerns
Landlord organisations argue that a reformed and improved court system and improvements to the grounds for possession should be introduced before Section 21 is amended or abolished. They believe that landlords should have the right to regain possession of their properties if they so wish, and that the proposed changes could lead to a stunted growth of the private rental sector and an eventual lack of housing for the most vulnerable.
When will Section 21 be abolished?
As it stands in March 2023, the Renters’ Reform Bill is still being drafted by the Department for Levelling Up, Housing and Communities and it has not yet begun to make its way through Parliament. However, it is expected to be introduced before the current Parliamentary session ends in May and passed into law by spring 2024.
Final Thoughts
While nothing is set in stone yet, it’s important for private landlords in the UK to be aware of the potential changes to Section 21 and other reforms in the housing sector in order to amend their plans for their property and finances.
With the housing market in the UK cooling down, combined with high rates of borrowing, changes in taxation, and potentially disruptive housing legislation coming up, now might be a good time to consider selling your property.
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